Mortgage Terms

Mortgage Terms

Your guide to understanding key mortgage language—clear, empowering, and built for smart homeowners.

Whether you’re accessing equity, exploring broker-only programs, or preparing to refinance, understanding mortgage terms is essential. This glossary breaks down the language lenders use—without the jargon. Start with the must-know definitions, then explore the full list to deepen your knowledge and make legacy-ready decisions.

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🔑 Must-Know Mortgage Terms

Annual Percentage Rate (APR)

A broader measure of the cost of borrowing that includes interest rate plus fees and other charges.

Loan-to-Value Ratio (LTV)

A measure of how much you owe on your mortgage compared to your home’s value—used to assess equity and risk.

Debt-to-Income Ratio (DTI)

A calculation comparing your monthly debt payments to your gross monthly income—used to determine loan eligibility.

Equity

The difference between your home’s market value and the amount you owe on your mortgage.

Credit Score

A numerical rating that reflects your creditworthiness, used by lenders to assess risk.

Refinance

Replacing an existing mortgage with a new one, often to secure a lower rate or change loan terms.

HELOC (Home Equity Line of Credit)

A revolving credit line secured by your home’s equity, often used for renovations or debt consolidation.

Fixed-Rate Mortgage

A loan with an interest rate that remains the same for the entire term of the mortgage.

Escrow

A neutral third-party account used to hold funds during a real estate transaction, often for taxes and insurance.

Closing Costs

Fees paid at the end of a real estate transaction, including lender fees, title charges, and escrow expenses.

Pre-Approval

A lender’s conditional offer stating how much you may be eligible to borrow, based on your financial profile.

Broker-Only Mortgage Program

Loan options available exclusively through licensed mortgage brokers—not directly from banks or retail lenders.

Cash-Out Refinance

Replacing your existing mortgage with a new one and withdrawing a portion of your home’s equity as cash.

Amortization

The process of paying off a loan over time through regular payments of principal and interest.

Interest Rate

The cost of borrowing money, expressed as a percentage of the loan amount.

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📚 Full Mortgage Glossary

Amortization

The process of paying off a loan over time through regular payments of principal and interest.

Annual Percentage Rate (APR)

A broader measure of the cost of borrowing that includes interest rate plus fees and other charges.

Appraisal

An independent estimate of a property’s market value, used by lenders to determine loan eligibility.

Broker-Only Mortgage Program

Loan options available exclusively through licensed mortgage brokers—not directly from banks or retail lenders.

Cash-Out Refinance

Replacing your existing mortgage with a new one and withdrawing a portion of your home’s equity as cash.

Closing Costs

Fees paid at the end of a real estate transaction, including lender fees, title charges, and escrow expenses.

Credit Score

A numerical rating that reflects your creditworthiness, used by lenders to assess risk.

Debt-to-Income Ratio (DTI)

A calculation comparing your monthly debt payments to your gross monthly income—used to determine loan eligibility.

Down Payment

The upfront amount paid toward a home purchase, typically expressed as a percentage of the purchase price.

Escrow

A neutral third-party account used to hold funds during a real estate transaction, often for taxes and insurance.

Equity

The difference between your home’s market value and the amount you owe on your mortgage.

Fixed-Rate Mortgage

A loan with an interest rate that remains the same for the entire term of the mortgage.

HELOC (Home Equity Line of Credit)

A revolving credit line secured by your home’s equity, often used for renovations or debt consolidation.

Interest Rate

The cost of borrowing money, expressed as a percentage of the loan amount.

Loan Estimate

A standardized document that outlines the terms, costs, and risks of a mortgage offer.

Loan-to-Value Ratio (LTV)

A measure of how much you owe on your mortgage compared to your home’s value—used to assess equity and risk.

Mortgage Insurance (PMI)

Insurance required for certain loans when the down payment is less than 20%, protecting the lender if the borrower defaults.

Origination Fee

A charge by the lender for processing a new loan application.

Pre-Approval

A lender’s conditional offer stating how much you may be eligible to borrow, based on your financial profile.

Principal

The amount of money borrowed, not including interest.

Rate Lock

An agreement between borrower and lender to fix the interest rate for a set period during the loan process.

Refinance

Replacing an existing mortgage with a new one, often to secure a lower rate or change loan terms.

Title

Legal ownership of a property, verified during the mortgage process.

Underwriting

The lender’s process of evaluating your financial information to determine loan approval.